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| the study of how individuals and societies choose to use their scarce resources that nature and previous generations have provided. |
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| the est alternative that we forgo, or give up, when we make a choice or decision. |
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| costs that cannot be avoided because they have already bee incurred |
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| a market in which profit opportunities are eliminated almost instantaneously |
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| the process of analyzing the additional or incremental costs or benefits arising from a choice or decision. |
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| the period in England during the late 18th and early 19th centuries in which new manufacturing technologies and improved transportation gave rise to the modern factory system and a massive movement of the population for the countryside to the cities. |
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| the branch of economics that examines the functioning of individual decision-making units- that is, firms and households. |
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| the branch of economics that examines the economic behavior of aggregates- income, employment, output, and so on- on a national scale. |
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| an approach to economics that seeks to understand behavior and the operation of systems without making judgements. it describes what exists and how it works. |
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| an approach to economics that analyzes outcomes of economic behavior, evaluates them a good or bad, and may prescribe courses of action. |
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| the compilation of data that describe phenomena and facts |
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| a statement or set of related statements about cause and effects, and action and reaction. |
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| a formal statement of a theory, usually a math statement of a presumed relationship between 2 or more variables. |
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| a measure that can change from time to time or from observation to observation |
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| the principle that irrelevant detail should be cut away |
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| the erroneous belief that what is true for a part is necessarily true for the whole |
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| the collection and use of data to test economic theories |
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| in economics, allocative efficiency. An efficient economy is one that produces what people want at least possible cost. |
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| an increase in the total output of an economy |
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| a condition in which national output is growing steadily, with low inflation and full employment of resources |
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| anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants |
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| goods and services of value to households |
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| the best alternative that we give up, or forgo, when we make a choice or decision |
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| theory of comparative advantage |
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| Ricardos theory that specialization and free trade will benefit all trading parties, even those that may be "absolutely" more efficient producers |
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| a producer has an absolute advantage over another in the production of a good or service if he or she can produce that product using fewer resources |
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| a producer has a comparative advantage over another in the production of a good or service if he or she can produce that product using fewer resources. |
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| goods produced for present consumption |
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| the process of using resources to produce new capital |
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| marginal rate of transformation (MRT) |
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| the slope of the production possibility frontier (ppf) |
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| an increase in the total output of an economy. it occurs when a society acquires new resources or when it learns to produce more using existing resources. |
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| an economy in which a central government either directly or indirectly sets output targets, incomes, and prices. |
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| literally from the french: "allow them to do." An economy in which individual people and firms pursue their own self-interest without any central direction or regulation. |
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| the institution though which buyers and sellers interact and engage in exchange |
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| the idea that consumers ultimately dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase). |
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| the freedom of individuals to start and operate private businesses in search of profits. |
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| a person who organizes, manages, and assumes the risks of a firm, taking new product and turning it into a successful business |
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| the consuming units in an economy |
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| the input/factor market in which households supply work for wages to firms that demand labor |
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| the input/factor market in which households supply their savings, for interest or for claims to future profits to firms that demand funds to buy capital goods |
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| the input/factor market in which households supply land or other real property in exchange for rent |
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| the inputs into the production process. and, labor, and capital are the three key factors of production |
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| the amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price |
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| a table showing how much of a given product a household would be willing to buy at different prices |
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| a graph illustrating how much of a given product a household would be willing to buy at different prices |
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| the negative relationship between price and quantity demanded; as price rises, quantity demanded decreases; as price falls, quantity demanded increases. |
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| the sum of all a households wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time.it is flow measure |
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| the total value of what a household owns minus what it owes. it is stock measure |
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| goods for which demand goes up when income is higher and for which demand goes down when income is lower. |
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| goods for which demand trend to fall when income rises |
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| goods that can serve as replacements for one another; when the price of one increases, demand for the other increases |
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| complements, complementary goods |
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| goods that "go together" a decrease in the price of one results in an increase in demand for the other and vice versa. |
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| the change that takes place in a demand curve correspond to a new relationship between quantity demanded of a good and price of that good. the shift is brought about by a change in the original conditions. |
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| movement along a demand curve |
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| the change in quantity demanded brought about bya change in price |
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| the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service. |
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| the difference between revenues and costs |
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| the amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period. |
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| a table showing how much of a product firms will sell at alternative prices. |
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| the positive relationship between price and quantity of a good supplied: an increase in market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied. |
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| a graph illustrating how much of a product a firm will set at different prices. |
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| movement along the supply curve |
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| the change in quantity supplied brought about by a change in price |
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| the change that takes place in a supply curve corresponding to a new relationship between quantity supplied of a good and the price of that good. the shift is brought about by a change in the original conditions. |
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| the sum of all that is supplied each period by all producers of a single product |
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| the condition that exists when quantity supplied and quantity demanded are equal. at equilibrium, there is no tendency for price to change. |
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| excess demand or shortage |
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| the condition that exists when quantity supplied at the current price |
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| the condition that exists when quantity supplied exceeds quantity demanded at the current price. |
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| the cycle of short-term ups and downs the economy |
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| the total quantity of goods and services produced in an economy in a given period. |
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| a period during which aggregate output declines. conventionally, a period in which aggregate output declines for 2 consecutive quarters. |
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| a prolonged and deep recession |
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| the period in the business cycle from a trough up to a peak during which output and employment grow |
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| the period in the business cycle from a peak down to a trough during which output and employment fall. |
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| the percentage of the labor force that is unemployed. |
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| an increase in the overall price level |
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| a period of very rapid increases in the overall price level |
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| a decrease in the overall price level |
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| a diagram showing the income received and payments made by each sector of the economy. |
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| cash payments made by the government to people who do not supply goods, services, or labor in exchange for these payments. |
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| trasurury bonds, notes, and billd |
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Definition
| promissiry notes issued by the federal government when it borrows money |
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| promissory notes issued by firms when they borrow money |
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| financial instruments that give to the holder a share in the firms ownership and therefore the right to share in the firms profits |
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| the portion of a firms profits that the firm pays out each period to its shareholders |
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| government policies concerning taxes and spending |
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| the tools used by the federal reserve to control the quantity of money, which in turn affects interest rates. |
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| the period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s |
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| the phase used by Walter Heller to refer to the government's role in regulating inflation and unemployment |
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| a situation of both high inflation and high unemployment |
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